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WOLF BLITZER, HOST: This is "Late Edition," the last word in Sunday talk. Iraq in crisis. Is the country on the brink of civil war? We'll ask President Bush's national security adviser, Stephen Hadley, and Iraq's national security adviser, Mowaffak Al-Rubaie.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: If there was any chance that this transaction would jeopardize the security of the United States, it would not go forward.

(END VIDEO CLIP)

BLITZER: A Middle Eastern company is poised to take control over key U.S. ports. We'll discuss that and more with two U.S. senators, Democrat Dianne Feinstein and Republican Kay Bailey Hutchison.

And former president Jimmy Carter in a wide-ranging interview. His thoughts on the future of Mideast peace, a nuclear Iran and the war on terror.

It's 11:00 a.m. in Washington and here in Miami, 8:00 a.m. in Los Angeles, 4:00 p.m. in London and 7:00 p.m. in Baghdad.

Wherever you're watching from around the world, thanks very much for joining us for "Late Edition."

We'll get to my interview with the national security adviser Stephen Hadley in just a moment.

First, though, let's get a quick check of what's in the news right now.

(NEWS BREAK)

BLITZER: The roof of the Golden Mosque, one of the holiest shrines in Iraq, lies in ruins. Now with hundreds dead in religious strife, are U.S. plans for a united Iraq in ruins as well?

Also, the political uproar over the U.S. port operations being taken over by an Arab company.

Just a short while ago I spoke about both these issues and more with Stephen Hadley, President Bush's national security adviser.

(BEGIN VIDEOTAPE)

BLITZER (on camera): Stephen Hadley, welcome back to "Late Edition." Thanks very much for joining us. There was a really powerful explosion at that Golden Mosque in Samarra in Iraq this past week, threatening all out civil war, if you will. Does the United States government know who was responsible for that attack?

STEPHEN HADLEY, U.S. NATIONAL SECURITY ADVISER: We do not have the kind of forensic evidence at this point to know who is specifically responsible.

I can tell you what the Iraqis have said. The Iraqis have basically said that the threat to the unity of Iraq is the terrorists and their terrorism activities. And they are clearly putting it on those terrorist elements that have caused so much carnage in Iraq here in recent days.

BLITZER: Some Iraqis, including Mowaffak al-Rubaie, the national security adviser, have pinpointed Abu Musab al-Zarqawi and his group, Al Qaida in Iraq. Are you prepared to go that far?

HADLEY: I know that's what they've said.

Certainly, this kind of activity is very consistent with what Zarqawi and his people have done.

But as I say, you know, there's a process by which you go through forensic evidence to make these kinds of determinations. We have not been through that.

But that is -- the Iraqis are pretty clear on who they think is responsible for this, and it's Zarqawi.

BLITZER: I interviewed Ayad Allawi, the former interim prime minister, earlier in the week. He said last summer he was already worried that the Iraqis were in a stage-one civil war. He thinks they've now gone to stage two. And he says "God help all Iraqis, all 27 million, 28 million and God help the entire region if they go to stage three."

What is your sense of the possibility of an all-out civil war between Shiite and Sunni and Kurds, perhaps, erupting right now?

HADLEY: Well, there obviously have been sectarian tensions in Iraq.

This is -- these go back historically for a long time. They were somewhat kept under wraps by Saddam Hussein. But obviously, there have been sectarian tensions. And of course, what Zarqawi has done is tried to exacerbate those by his consistent attacks on Shia sites.

This recent attack is very troubling. We strongly condemn it. It has caused real tension. But I thought it was interesting that the Iraqi prime minister yesterday came out and said, "We are not on the verge of civil war." And a meeting of a high-level council met last night for three hours. They came out, came on the camera and basically pledged themselves to work together for unity, avoiding violence. And I think the opportunity this presents is for the Iraqi communities, all three of them, to come together, to develop a unity government and say to Iraqis and to the world that they are not going to go down the route of civil war. And that's certainly what we hope will happen.

BLITZER: A lot of the minority Sunni Iraqis say they're right now terrified by the majority Shia.

The Department of Defense issued a report the other day in which it said -- it concluded -- among other things, it concluded this: "Insurgent infiltration and militia influence remain a concern for the ministry of the interior" -- referring to the Iraqi Ministry of the Interior. "Many serving police officers, particularly in the south, have ties to Shia militias."

And an Iraqi Islamic party official, a Sunni leader, is quoted as saying, "Forces of the ministry of the interior are making attacks in many districts of Baghdad and arrest people without any accusations, simply because they are Sunni people."

It looks like this situation, this divide between Shia and Sunni, is getting worse.

HADLEY: There had been concerns about the Iraqi police.

As you know, we, through our military, have been training the Iraqi national army. That is going very well.

The military has also taken responsibility for training the police. That is clearly about a year or so below -- behind where we are in training the Iraqi army.

And there have been concerns about infiltration of militia into the police. And one of the major priorities for 2006 is to concentrate on the police, work through and make sure that the people in the police do not have ties to militia groups, are going to be loyal to the central authority and have the necessary training to do their job.

Again, there's work to do. That's why General Casey has made 2006 a real priority to focus on the Iraqi police. It's also why, as Ambassador Khalilzad said, it is very important in the new government that the heads of the ministry of defense, ministry of interior, be professionals, competent, without ties to militia, who will run these organizations in a nonsectarian way. That's very important and that's why Ambassador Khalilzad made those statements earlier this week.

BLITZER: You want -- the United States government -- you want the Iraqis to disband the militias, whether the Mahdi militia ruled by the Shiites or the Peshmerga militia ruled by the Kurds.

Is that the position of the Bush administration, that all of these independent militias who are operating, they must be disbanded?

HADLEY: Certainly, that is our position. We want to build a national Iraqi army, a national Iraqi police force that will be free of ties to the militia and loyal to the central government. That's our objective. That's what the training program is all about.

But as we've seen in Afghanistan, disarming militias takes some time. There's a point in the political process where that can be done. It is difficult now because the communities do not feel comfortable. They do not feel secure.

We saw this in Afghanistan. There were militias there. It took some time. But one of the good news about Afghanistan is that there has been largely dismantling those militias.

That's our view, is what needs to happen in Iraq. Obviously, the timing of that is going to be something that the new Iraqi government will have to take responsibility for.

BLITZER: A few months back, the Defense Department, the Pentagon, issued a report saying that there were three Iraqi brigades that were now at what they call level one, capable of operating on their own without any U.S. assistance. Then more recently, it went down from three to one Iraqi brigade.

And only the other day in this latest Pentagon report, they now say there are zero Iraqi brigades that are level one, capable of operating without U.S. assistance. Those trend lines don't seem to be going in the right direction.

HADLEY: But those aren't the trend lines that matter.

There's been a lot of discussion about this. What matters is Iraqi units that are able to work side by side with coalition forces and Iraqi units that are able to take the lead with support by coalition forces and finally, those Iraqi units that are able to take responsibility for territory with minimal coalition support. Those numbers are all going up in a sensible and a measured way. That's an evidence of the success of this program.

Look, Wolf, the number of U.S. or NATO units that can operate wholly independently are very small. To say that a unit operates wholly independently means its got its own logistics, own air support and all the rest.

That is an area where we have more work to do, to build logistics, transport and other things that will allow the Iraqi army to operate, really, autonomously. That's going to take time. The DOD forces over there have a program to do that, but it's going to take months and years.

What really matters, though, is the ability of these forces to take responsibility, in conjunction with the coalition forces, and then take the lead. They are increasingly able to do so. That's the good news about the training program. The logistics of the things will take some months to do. We're on that. But the main thing is that Iraqis want to be and are getting into the fight against the terrorists to win their own freedom from the terror that is really the scourge of Iraq at this point.

BLITZER: Let's make the turn to port security in the United States. Dubai Ports World purchasing the rights to operate six major U.S. ports: New York, Newark, Baltimore, Philadelphia, New Orleans and Miami. Is the Bush administration now ready to give this deal another 45 days to have a full-scale national security investigation to determine whether this is the right thing for the United States to do or the wrong thing for the United States to do?

HADLEY: As you know, Wolf, the president supports the decision that was made. He believes that the process that was run was a good one, and it came to the right result. It's obvious that we need to make -- have some opportunities and some time to get a better understanding on the part of the Congress as to what is entailed in this transaction. We're confident -- the president is confident that when Congress really understands the transaction, they will conclude, as he did, that it's the right thing to do.

We understand that the companies involved in the transaction are talking to the Congress about ways to get a time and a mechanism for allowing this to go forward. We are aware of those efforts. We support those efforts. And what the Congress and the companies are able to work out, we will obviously support and cooperate with, so long as it does not involve a summary decision by the Congress that blocks this transaction.

We're confident by this process, Congress will come to the same conclusion the president did.

BLITZER: The law -- the CFIUS law, the Committee on Foreign Investments in the United States, stipulates that if national security considerations are at stake, there must be this 45-day investigation. Bob Kimmitt, the deputy treasury secretary, this week said the national security considerations are not at stake involving this Dubai-owned company. Listen to what he said.

(BEGIN VIDEO CLIP)

BOB KIMMITT, DEPUTY TREASURY SECRETARY: On January 17, the committee was asked to make its judgment on this proposed acquisition. By consensus they said that there was not a national security concern in their mind that would require either blocking the deal or sending it to investigation.

(END VIDEO CLIP)

BLITZER: Among the many critics of this deal, Democrats and Republicans, including Rick Santorum, the Republican senator from Pennsylvania. He said, "While the United Arab Emirates has been an ally over the last few years, it certainly has ties to Islamic fascism, and trusting that it will remain on our said in the war on terror is not a risk that I am willing to take." How is it possible that this committee, interagency committee, determined there was no national security interest at stake worthy of justifying a 45-day investigation?

HADLEY: Because that was the determination they made. They'd made it based on available intelligence, which did not suggest any national security concerns. All the 12 or so agencies involved looked at it. None of them requested an investigation, because there were unresolved concerns.

The Department of Homeland Security, which is the agency most directly involved with those security aspects, negotiated with the company some additional assurances, of which you are aware, that removed any residual concerns they had.

And part of it is also this is a company that is known to U.S. authorities that operates terminal operations in a number of ports overseas, where we are engaged personally with them.

Remember, port security doesn't start at our ports. It starts overseas with the cooperations of countries and companies operating ports overseas to make sure that cargo containers and other things heading our way are safe. The first line of defense is overseas, and this company and this country have been very good allies in that process.

BLITZER: I was going to say, as the national security adviser to the president, when were you informed? When did you first learn about this deal?

HADLEY: I learned about it roughly at the same time that the president did. Within two or three days thereafter, I brought in all those people within the National Security Council who -- staff who had been involved. I did a review of what was done, and I came to the same conclusions the president had done, that this was a good process, that there were not unresolved national security concerns.

And I was buoyed by the kinds of statements you've seen from General Tommy Franks, General Pete Pace, who have talked about what a good ally the UAE has been to the United States. And they have been an ally in the war on terror. They have supported our operations and activities in terms of both Iraq and Afghanistan.

And it's very important, Wolf, that countries that side with us and are cooperating with us are treated like the allies that they are. We need a lot of support from Arab countries if we are going to prevail in this war on terror. And you don't get those -- that kind of support if you don't treat your allies as the kinds of good stalwart allies and friends that they are trying to be.

BLITZER: A lot of people are probably scratching their heads right now, listening to you, Mr. Hadley, because, while the UAE may be a good ally right now, it hasn't always been the case.

The 9/11 Commission concluded this: "The United Arab Emirates, the financial center for the Gulf area, also had a reputation for being wide open with few regulations on the control of money and a woefully inadequate anti-money-laundering program. The vast majority of the money funding the September 11 attacks flowed through the UAE." And the UAE was one of only three countries that had relations with the Taliban regime in Afghanistan before 9/11.

So they're asking, how is it possible that you could conclude there were no national security considerations at stake that would have justified a more thorough investigation?

HADLEY: Because a lot of things changed after 9/11. A lot of things changed in how we do business. A lot of things changed on how other countries conducted themselves.

Wolf, all the things you said could have been applied to Pakistan. And as you know, the United States at this point has a very loyal ally in the war on terror against -- war against terror in Pakistan. Pakistan is involved in activities and operations against al Qaida. There have been several hundred al Qaida operatives that have been either killed or captured by Pakistani authorities. Pakistanis, large numbers of their security forces have lost their lives.

The point is, I think, not withstanding what was done before 9/11, the kinds of things you could say with respect to UAE or Pakistan, these are two countries who have been good allies in the war on terror and whose support we're going to need if we're going to prevail in this conflict.

BLITZER: The leadership of Pakistan, President Musharraf, is a strong ally. But as you know, there are elements in the military, in the intelligence community who may not necessarily be all that supportive. Are you saying that if Pakistan wanted to operate ports in the United States that it wouldn't justify a national security investigation?

HADLEY: I'm saying if Pakistan wanted to operate ports in the United States, we would do exactly what was done in this case. We would get the agencies together. We would look at the applicable intelligence. We would have each of the agencies take a look. If there were national security concerns that were raised, we would deal with them. That's the process that we need to do.

But the point is, Wolf, the test is not whether the acquiring country is an Arab country or not. The test is whether the acquiring country -- company and the company through which they would exercise control raises national security concerns. That's the test. That was the test that was applied in this case, and that would be the test that should be applied in every other case. It's the test that this Congress specified in the statute. And that's what we've been trying to apply.

BLITZER: We're all out of time, but a quick question on Iran and its nuclear enrichment program. Reports today it's worked out some sort of tentative deal with Russia that would enable Russia to enrich uranium from Iran. You've seen those reports. What do you make of them? HADLEY: It's too soon to say. We'll have to see. The Russian energy minister announcing an agreement in principle, but said that negotiations would continue in Moscow. In any of these arrangements, the devil is in the details. We'll just have to see what emerges.

BLITZER: Stephen Hadley, thanks for joining us on "Late Edition."

HADLEY: Thanks very much.

BLITZER: And just ahead, Dubai Ports World approved to take over port facilities across the United States, including here in Miami. Some say Dubai is one of the strongest allies in the war against terror. Others insist the country has worrisome links to terror. Two U.S. senators standing by to weigh in.

Then, to some, the fight over ports looks like an anti-Arab discrimination effort. We'll go live to Dubai and speak with James Zogby of the Arab-American Institute. And later, is Iraq on the verge of civil war? The inside story from the Iraqi national security adviser.

Stay with "Late Edition," the last word in Sunday talk.

(COMMERCIAL BREAK)

BLITZER: Welcome back to "Late Edition."

I'm Wolf Blitzer, reporting today from Miami. The officials who signed off on the sale of port facilities here in Miami and five other major U.S. cities to a company owned by the United Arab Emirates may have thought it was just a routine matter, so routine that, apparently, they never brought it to the attention of anyone in the Bush Cabinet, much less President Bush himself.

On Capitol Hill, the reaction was anything but routine.

Joining us now to discuss this issue and more, two guests: from San Francisco, Democratic Senator Dianne Feinstein. She's a member of the Intelligence Committee.

And in Dallas, Republican Senator Kay Bailey Hutchison. She's a member of the Commerce, Science, and Transportation Committee. Senators, to both of you, thanks very much for joining us.

We'll start off talking about the whole issue of port security. Senator John Warner, the chairman of the Senate Armed Services Committee, says he's now reached a compromise deal of sorts with Dubai Ports World that would allow a 45-day investigation of national security implications to go forward.

Senator Feinstein, is this good enough for you?

SEN. DIANNE FEINSTEIN (D), CALIFORNIA: Well, I don't know. I want to take a look at the legislation that Chuck Schumer has done. I think the moratorium, or the pause, is good. I think we have to take a good look at this. I think we have some major policy decisions to make.

Do we want our national security assets to be sold to foreign powers? And this company is controlled by the government, which means a foreign power essentially would run these terminals which, I understand, are more than five but probably closer to 21.

In California, we have the largest port in the nation, L.A. Long Beach. It has, let's see, 80 different shipping lines. It has 50 different terminal operators. You have 11,000 truckers coming in and out a day with only a driver's license as identification.

What's my point? My point is that the security at American ports is still not what it should be. And this raises a more fundamental question. Do we want, let's say, American companies that own nuclear power plants to be bought out by foreign entities?

I think the delay will enable us to take a look at some of these questions. I think they are major policy questions.

BLITZER: Senator Hutchison, a lot of people are simply scratching their heads and wondering how is it possible that the Bush administration, in reviewing this Dubai Ports World deal, didn't think there were any national security considerations worthy of even a 45- day delay, which, apparently, now is going to go forward with this deal worked out by Senator Warner?

Are you in favor of this deal?

SEN. KAY BAILEY HUTCHISON (R), TEXAS: I think it is important that we have the delay so that we can find out what the safeguards are.

But I would go to the major issue of port security in our country. And I have introduced legislation which is part of a bigger package pending for Senate passage.

And I'm thinking, maybe, we need to take the port issue right now because we could do a lot that would apply to every foreign import into our country by putting more inspectors in the foreign ports to make sure that anyone who wants to send something to America agrees to have American inspectors inspect.

Now, we cannot inspect every single piece of cargo, but we can do two things: we can have better technology with a seal that is tamperproof so that, when something comes in, all you have to do is check the seal.

And, secondly, we can do more at the point of embarkation with random samplings of the different cargo that should be inspected. And I think, if someone agrees to let us do that, then we would have a law that would have some teeth in it.

BLITZER: Well, right now, Senator Hutchison, if you had to vote yea or nay on this Dubai Ports World deal, how would you vote?

HUTCHISON: I don't know enough yet about it. And I think we need to know more about it. And I think Senator Feinstein brings up another point and that is the general rule of foreign ownership of important security assets.

BLITZER: If you had to vote yea or nay right now, Senator Feinstein, how would you vote?

FEINSTEIN: Well, I'd like to know more about it, too. For example, I'd like to know whether a full-scale intelligence evaluation was done. I'm told it was not.

I would like to know if this was run by the secretary of defense, the secretary of homeland security. I'm told they did not know this.

I think the process was a secondary process. I think this should have been brought to the president earlier. And I'm really coming to question some of these Treasury Department, kind of, hidden review processes which really involve large questions of public policy.

BLITZER: What about you? The process -- were you satisfied with the process, Senator Hutchison?

HUTCHISON: Well, I think the fact that the president was not even aware of this, when it was basically finalized, is a shortcoming. I do.

And I think now we all want to know more. And I think it is so important that we determine on a blanket basis -- I want to say, UAE is a good ally of the United States, and this is not directed at UAE, but I think we need to look at every single point of embarkation and we need to have solid rules that would protect cargo coming into our ports.

FEINSTEIN: Wolf, can I say one thing?

BLITZER: Go ahead, senator, yes.

FEINSTEIN: I spent a day at the Hong Kong port a few years ago when the new systems were just being set up and when some of our customs people were just arriving.

I spent it at CSX, which is an American terminal operator, a huge terminal operator, 13 stories tall in the port of Hong Kong. And it was a much more sophisticated situation than our ports are.

The problem with it is there's many a slip between the cup and the lip. And, whereas some of the shippers participate, others do not. So it's an uneven process.

And my understanding is, it's still an uneven process. And you have so many different terminal operators.

And although the Coast Guard sets the standards of the security with each operator, it's up to the operator to check it out. And that means you've got to know the security element with every single employee that comes in and out of a major port and that simply is not the case today. BLITZER: All right. We're going to take a quick break.

But Senator Hutchison, just very, very quickly before we go to break, the notion that there were no national security implications at stake here, is that something that you buy?

HUTCHISON: I think there are national security issues here. I think we have to look at it as such.

All of our transportation infrastructure should have national security requirements and standards. And the ports have been I think among the least that have gotten attention, and I think this brings it to the forefront.

And now I think we need to move forward in a positive way, not only to look at this particular deal but to assure that we have a system in place where we're in control of the security of cargo coming into the United States.

BLITZER: All right, Senators, stand by.

We're going to take a quick break, but we have lots more to talk about.

In a moment we'll get the senators' views on the increasing violence in Iraq. What if anything can be done to stop the insurgency? Is the country on the verge of civil war?

Up next, though, a quick check of what's in the news right now, including the latest bombings in Iraq. More people dead today.

Stay with "Late Edition."

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(NEWS BREAK)

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(BEGIN VIDEO CLIP)

BUSH: We can expect the days -- coming days will be intense. Iraq remains a serious situation, but I'm optimistic.

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BLITZER: President Bush speaking out on the situation in Iraq earlier in the week.

Welcome back to "Late Edition."

I'm Wolf Blitzer, reporting today from Miami.

In the chaos of Iraq, hard facts are difficult to find. But it's certain that hundreds are dead in the violence that erupted after the bombing of the al-Askariya Shrine in Samarra. Joining us again from San Francisco, Democratic Senator Dianne Feinstein, a member of the Intelligence Committee, and in Dallas, Republican Senator Kay Bailey Hutchison, a member of the Commerce, Science and Transportation Committee.

Senator Hutchison, are you optimistic about the situation in Iraq, like the president says he is?

HUTCHISON: Yes, I am.

I think that we have made great progress. This week was not a good week, very troubling. And we need to be as supportive as we can of the Iraqi politicians trying to set up that national unity government.

It is slow, but we must be patient. And I hope very much that we can continue to stay on course to try to stabilize and help put together this national unity government.

BLITZER: Senator Feinstein, are you optimistic?

FEINSTEIN: Well, I'm afraid this is one place where I really must disagree with my friend and colleague, Senator Hutchison.

I am extraordinarily concerned. I think this is the most critical juncture we've had in Iraq.

If this new government can't get itself together and if this sectarian violence continues, it's a step away from major civil war.

To pull 47 people off a bus and shoot everyone in the head indicates to me a level of hatred that is really unprecedented. And I am very concerned. I am very concerned about the training of the military and police.

The worst thing would be for the United States to get caught in the middle of a civil war.

The worst thing would be for the United States to get caught in the middle of a civil war. This president has not said what his plan is. He has not said how he would handle this situation. He has not said whether he would keep American troops there if this does evolve into a civil war.

And I think the people of America are entitled to have a plan and entitled to have some benchmarks right now. This is a deteriorating situation, and we have to deal with it as such and not just say, I'm optimistic.

BLITZER: Senator Hutchison, the secretary of state, Condoleezza Rice, says that if the situation deteriorates into civil war in Iraq, it's not only a problems there but elsewhere as well. Listen to what she said. I'll read it to you: "I do think there is concern that the sectarian tensions that outsiders are stoking in Iraq, that the same outsiders might try to stoke sectarian tensions in other parts of the region as well." In other words, if the situation really gets into a mess even worse than it is now in Iraq, there could be an enormous ripple effect throughout the Middle East.

HUTCHISON: Wolf, there is no question that that is correct. We are looking at a situation that, if we can't get a stabilization in Iraq, it could cause a destabilization in many other areas where we know there are those same outside terrorist influences. There is no question that al Qaida and Hezbollah, Hamas are trying to destabilize all of the Middle East.

And we must, first of all, try not to take sides in this sectarian uprising that has happened in Iraq. That's why I think the president is not stepping in and saying who's at fault or what is causing this. We do not want to be seen to be taking sides. That would undermine the ability to help them create their own national unity government. So I am greatly concerned, as Senator Feinstein is.

And I think we need to be the stabilizing force, not a force that takes sides. And we do need to watch it because obviously we don't want to lose the momentum that we have in other parts of the Middle East toward more self-governance in other parts.

HUTCHISON: Well, perhaps optimistic is not the right word. But I think we have to stay in the same position that we are, which is supportive but not taking sides in Iraq. And we have to believe that in the long term, we are going to provide the stability that all of this major effort that we have had in Iraq would provide, because if we can stabilize Iraq and show that outside forces cannot disrupt the self-governance of people and the democracy that is forming there, then that is a huge symbol to the rest of the Middle East.

And what's happening in Afghanistan must also have the same attention. They are making great strides toward self-governance, and we need to be a party to helping them in creating that stability. If those two countries can be stabilized, then it sends a great signal and a model for the rest of the Middle East.

BLITZER: We have to, unfortunately, leave it there. We're out of time. But I want to thank both senators, Senator Feinstein and Senator Hutchison. Both of you, thank you very much for coming in to "Late Edition." Appreciate it very much.

Coming up next on "Late Edition," is the United Arab Emirates a strong ally or a weak link in the war against terror? We'll go live to Dubai and speak with James Zogby of the Arab-American Institute. You're watching "Late Edition."

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BLITZER: It's a simple question. If the port facilities being purchased by Dubai Ports World were being sold to any company not owned by Arabs, would there be a controversy over the sale? Is this a debate about real national security concerns, or is it anti-Arab discrimination?

Dr. James Zogby is currently the founder and president of the Arab-American Institute. He's joining us live from Dubai. Jim, thanks very much for joining us.

JAMES ZOGBY, PRESIDENT, ARAB-AMERICAN INSTITUTE: Thanks, Wolf.

BLITZER: You understand the concern many members of the House and Senate have expressed over this deal, the national security concern, given the United Arab Emirates' track record in dealing with the Taliban before 9/11 and dealing with Osama bin Laden, if you will, at the same time.

ZOGBY: Well, actually, there was no dealing with Osama bin Laden, but the recognition of the Taliban is I think a story that actually needs to be told and probably will someday in a public way by all parties involved. They recognized the Taliban, as did Saudi Arabia and Pakistan, because the United States wanted them to.

It was -- we had no assets on the ground in that country, and frankly we were afraid of it falling apart, as we see Iraq falling apart today. And so the need to get intelligence and to have some friends monitor the situation was the order of the day. I think it's a shame that these three countries are being punished for having done us a favor and stick their necks out in a very unpleasant situation when that's what we asked them to do.

BLITZER: Well, you say that, but the 9/11 commission report...

ZOGBY: And let me tell you...

BLITZER: Hold on a second. The 9/11 commission report concluded this. It said, "From 1999 through early 2001, the United States and President Clinton personally pressed the UAE, one of the Taliban's only travel and financial outlets to the outside world, to break off its ties and enforce sanctions, especially those relating to flights to and from Afghanistan. These efforts achieved little before 9/11."

Are you saying the 9/11 commission report was wrong in that conclusion?

ZOGBY: No. I'm saying that the recognition was the result of a favor to the United States. The fact is that a whole lot of people went in and out of Dubai. It's one of the freest and one of the most frequently used airports in the world. It's a hub. I think that there were considerations here that went above and beyond national security interests. I know that our government asked them to do that. But governments frequently disagree about a lot of things.

The fact is, were they friend or foe? And they were a friend before, and they're a friend now. Look, I mean, I've heard this argument made that they weren't an ally in the war on terror before 9/11, but frankly, nobody was because there was no war on terror before 9/11. And if we hold every other country to the standard that we're applying to the UAE, the Clinton administration and the Bush administration probably would have failed the test as well. There were a whole lot of lapses in our intelligence, a whole lot of problems that we had as well that I think the world in general woke up at 9/11. And you judge people by the time that it was time to wake up. I think the UAE has been a partner and a friend, and we ought to judge them as that. Look, if the conversation that Congress were having were like the conversation that Kay Bailey Hutchison and Dianne Feinstein had just a moment ago, we wouldn't be talking about the issue we're talking about right now.

It was measured. It was thoughtful. They disagreed, but it was done in a respectful way.

Look, on the other hand, at the rhetoric that came from some of the congressmen and senators from New York and New Jersey and Pennsylvania. It was shameful, calling it a rogue government, calling it -- ties to Islamic fascism, saying, as one Congressman did that, if this were a deal with any other country but an Arab country it would be OK, but this raises my concern.

I think that there was, in fact, shameful rhetoric that did belie a deep-seated resentment or fear of Arabs. And I think it was wrong.

BLITZER: Well, listen to what Senator Chuck Schumer of New York said this past week. Listen to this.

(BEGIN VIDEO CLIP)

SEN. CHARLES SCHUMER (D), NEW YORK: People on the street are scratching their head in disbelief. How could we turn over one of the most vital areas of homeland security to a company run by a country that has a nexus of involvement with terrorism?

(END VIDEO CLIP)

BLITZER: Is that one of the statements you're referring to?

ZOGBY: That's exactly the kind of rhetoric I'm talking about. And the reason why people are afraid is because leadership led them down this path. It exploited the fear, the concern and it used an Arab bogeyman to do it.

I think it was a shameful and irresponsible display that came from members of Congress, tripping over each other to the microphone, trying to be as outrageous as they possibly could to make sure they got the sound bite of the night.

Many of them know better. And, frankly, I am not pleased. This was not our finest hour. I think the conversation you had right before me was very measured, very thoughtful.

Yes, there's disagreement. And we've got to debate port security. It's a fundamental concern that all Americans need to have. But it's not fair to make the UAE into the bogeyman in this instance because, frankly, they're not. This nexus with terror -- frankly, more of the terrorists did their operational training and recruitment in Germany. Are we going to stop trading with Germany? Look at the problems that we're now discovering exist in Britain. Do we stop trading with Britain? It was a British company that just ran the ports before it was sold to a UAE company.

There are probably more terrorists recruited in Britain than there are in the UAE. Let us be fair. The president actually got this one right. I think that the administration actually created some of the fear about all things Arab, but they got this one right and we need to give them credit for it.

BLITZER: Jim Zogby joining us from Dubai. Have a safe trip back to Washington. We'll see you back here when you get back.

ZOGBY: Thank you.

BLITZER: Thanks very much, Dr. James Zogby, joining us.

And don't forget our web question of the week: Where in the U.S. is it most urgent to step up security? Airports, mass transit, borders or ports? Cast your vote. Go to CNN.com/lateedition. We'll be right back. But, first, this.

(BEGIN VIDEOTAPE)

BLITZER (voice over): Lawrence Summers: what's his story?

The embattled president of Harvard University is stepping down from his position at one of America's most prestigious universities. Summers came under fire a year ago for suggesting that innate differences between men and women were to blame for women lagging behind in math and science careers.

Those comments landed him a vote of no confidence from Harvard's faculty and calls for his resignation, despite overall student approval of his term.

A world-renowned economist, Summers served as the United States secretary of the treasury before taking office at Harvard in 2001. His reign marks the shortest tenure of any Harvard president in more than 100 years.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

BLITZER: This is "Late Edition," the last word in Sunday talk.

(BEGIN VIDEO CLIP)

BUSH: Iraqi leaders will bring the nation together and this will help to defeat the terrorists and the Saddamists who are fighting Iraq's democratic progress.

(END VIDEO CLIP)

BLITZER: Is Iraq on the brink of a civil war? How can the new Iraqi government maintain control during an explosion in violence?

We'll ask Iraq's national security adviser Mowaffak al-Rubaie.

(BEGIN VIDEO CLIP)

JIMMY CARTER, FORMER PRESIDENT OF THE UNITED STATES: We ought to give a chance to the Palestinian people to establish a kind of government that can be constructive and peaceful.

(END VIDEO CLIP)

BLITZER: Is peace in the Middle East an option with Hamas in power?

We'll ask former president Jimmy Carter about the future of peace, nuclear nations and his take on the Bush administration.

Welcome back.

In a moment we'll go to Baghdad for my interview with Mowaffak al-Rubaie, the Iraqi national security adviser.

First, though, let's get a quick check of what's making news right now.

(NEWS BREAK)

BLITZER: In Iraq today, pleas for a cease-fire, reports of yet more bloodshed. For more, let's go to CNN's Aneesh Raman. He's joining us live from Baghdad with the latest -- Aneesh?

ANEESH RAMAN, CNN CORRESPONDENT: Wolf, good afternoon.

Another voice in the calls for calm -- an important one this time. The Shia cleric Muqtada al-Sadr speaking to crowds in the southern Shia city of Basra today. He called for unity among Sunnis and Shias. He also had some harsh words for the U.S., which he always does, and as well called for further demonstrations, peaceful demonstrations in reaction to Wednesday's attack on that sacred Shia mosque.

It comes just a day after Iraqi political leaders, Kurdish, Sunni and Shia leaders alike, met at the invitation of Iraq's prime minister Ibrahim al-Jaafari. They discussed the current situation and as well discussed how they could start talks anew on forming a unity government.

Perhaps more important, though, than anything they discussed was that photo of all of them sitting together, a sign of unity.

But the big question here, Wolf, is whether or not Iraq's government and its leaders has enough clout to control the situation, the anger that is out there throughout the country. The violence persisted today in Baghdad. A suburb of Baghdad came under mortar fire. At least a dozen people were killed. Also in Basra, that southern city, shortly before Muqtada al-Sadr spoke, an explosion at a Shia shrine wounded at least two. And south of the capital in Hilla, a car bomb exploded wounding five, including a woman and a child.

The big question tomorrow, Wolf, here in the capital will be what reaction there is on the streets of Baghdad after this extraordinary 34-hour curfew is set to expire Monday morning -- Wolf?

BLITZER: Aneesh, we'll be watching closely with you.

Aneesh Raman in Baghdad, thanks very much.

The destruction of Samarra's Askariya shrine on Wednesday set off days of violence leaving hundreds of people dead. As Iraqi Sunnis and Shiites literally battled in the streets, coalition troops stood back often letting Iraqi police and military forces try to work to calm the situation. Mandatory curfews at the end of the week finally brought a little bit of calm -- politicians, as we just saw, and religious leaders, though, scrambling to try to end the crisis.

Mowaffak al-Rubaie is the Iraqi national security adviser and we spoke to him just a short while ago from Baghdad.

(BEGIN VIDEOTAPE)

BLITZER: Mowaffak al-Rubaie, thanks very much for joining us.

Do you know who was responsible for the bombing of the Golden Mosque in Samarra this past week?

MOWAFFAK AL-RUBAIE, IRAQ'S NATIONAL SECURITY ADVISER: Well, the blueprint of that unfortunate event, the blueprints of Al Qaida in Iraq is there.

It's the same design, the same method, the same objective they wanted to achieve, which is a civil war. They wanted to drive a wedge between the two communities in Iraq, between the Shia and Sunnis. And they've been trying this for the last two and a half years and they failed miserably in this.

And I think also this is one of the most horrible, really terrible attacks on the doctrine, on the belief of the largest community in Iraq. And still, Iraqi people have proven that they've gone through this difficulty yet again and they have shown the Al Qaida and the outside world that they will never be driven to the civil war.

BLITZER: So when you say Al Qaida in Iraq, you mean Abu Musab al-Zarqawi? Is that right?

AL-RUBAIE: That's absolutely right.

It's the same organization of Al Qaida, this international terrorist organization, and one -- the branch of it in Iraq is Abu Musab al-Zarqawi leading this terrible attack, terrorist attacks against our people.

BLITZER: Have your security or police forces...

AL-RUBAIE: And against our -- and against...

BLITZER: ... arrested anyone?

AL-RUBAIE: Well, we have arrested 10 people. Four from the guards of the Golden Tomb (ph) shrine. And six -- there were in the city of Samarra, just moved in and rented a place. Six young people there. So we are investigating them.

We have a very -- there are two leads and these leads are very, very good in our investigation. And we will reveal this in the very near future, inshallah.

BLITZER: Do you have any idea where Abu Musab al-Zarqawi might be hiding out?

AL-RUBAIE: Well, he could be anywhere in Iraq.

But I can tell you, one day when he will be in the hand of the Iraqi people, in the hand of the Iraqi security forces and he will face justice in Iraq.

BLITZER: As you know, there's a lot of fear that Iraq is on the verge of civil war right now. Sunni Muslims are terrified in the aftermath of this attack. There's been widespread retaliation.

I want to read to you what Khalaf Ulayyan, general secretary of the Sunni-Iraqi National Dialogue Council, said the other day. He said, "The Americans also abandoned us extremely. They could have put some of their vehicles to protect the mosques. They have the forces to do that. How does a civil war start? It starts like this."

How worried are you, Dr. al-Rubaie, that Iraq is now on the verge of a civil war?

AL-RUBAIE: I have to admit, Wolf, that on the same -- in the same day of the -- of that unfortunate event, of the blowing up of the Golden Shrine, I was a little bit worried because that was a real test for the patience of the Iraqi people.

And apart from a few incidents here and there, the -- if you like -- airing and venting of the anger but in the wrong direction, in the wrong target. Unfortunate events followed that.

I think apart from that, there is a general call from the political leaders, from the official leaders, from the religious leaders in the country, everybody saying calm down. We need to come to our senses. We need to think this through. We need to put our single -- one most single enemy in front of us, which is Al Qaida in Iraq, which are the terrorists, the takfiris. These are the enemies of Iraq. Shia are not enemies of the Sunnis. Sunnis are not enemies of the Shia. So these two communities should not attack each other, and they should all join forces and attack Abu Musab Zarqawi and his terrorist organization.

BLITZER: I want to get to the issue of militias in a moment, but first the U.S. military role in trying to deal with this current crisis.

Listen to what Colonel Jeffrey Snow, the commander of the 1st Brigade 10th Mountain Division, said this week. Listen to this.

(BEGIN VIDEO CLIP)

COL. JEFFREY SNOW, COMMANDER, 1ST BRIGADE 10TH MOUNTAIN DIVISION: If they identify an issue, best to observe, find out what is the cause, what is the particular agenda, and then get somebody from Iraqi security forces to go out, talk to the people, find out what their concerns are and resolve the situation.

(END VIDEO CLIP)

BLITZER: Clearly, what he's suggesting is that the Iraqi police, the Iraqi military take the lead, the U.S. be in the background. Is that good enough, from your perspective?

AL-RUBAIE: I honestly believe that the Iraqi security forces now are capable of handling this issue and fighting terrorism in Iraq. And I believe there are more than 60 percent of the Iraqi security forces are ready and prepared to take on the terrorists. And the level of the training is very, very good.

We need the multinational forces to be over the horizon and supporting in the logistics and providing the logistics and continuing with the training of the Iraqi security forces. So we need them for two things. One is the logistical support, and the other thing is continue training the rest of the Iraqi security forces.

BLITZER: One of the great concerns that many have is the strength of the Iraqi militias, as opposed to the national security forces or the police. The U.S. ambassador, Zalmay Khalilzad, said this week this. Listen to what he said.

(BEGIN VIDEO CLIP)

ZALMAY KHALILZAD, U.S. AMBASSADOR TO IRAQ: We're not going to invest the resources of the American people to build forces run by people who are sectarian that -- therefore, the forces are not going to be trusted by the Iraqi people. They're not going to be able to do the job for which we are investing resources in. So that's why I said, they make their decisions. And we will have to make our own decision in the face of their decision.

(END VIDEO CLIP)

BLITZER: The response from many Shiite leaders, including Abdul Aziz al-Hakim, included this statement from Mr. al-Hakim. He said, "The ambassador's statements have given the green light for terrorist groups to carry out more violence. Consequently," he charges, "he" -- referring to the U.S. ambassador -- "bears some responsibility." What do you make of that?

AL-RUBAIE: I think it's very important to remember that we cannot build a democratic system in Iraq with the militia in the country. So we have a law which is reintegration and disbandment of the militia and the reintegration of these militia into the Iraqi security forces and others into the Iraqi government institutions and ministries. So we have -- and most of these militia organizations have signed on this law -- this piece of law and they're going to disband and dissolve and reintegrate into normal life in this country.

This is -- the presence of militia is incompatible with the constitutional parliamentary system in Iraq. And we are on -- and I think we read from the same page, probably, with a different spin. And nobody has any intention of putting any sectarian person in these security ministries or any ministries for that matter. And I think there is no place for a sectarian person in the new Iraqi government.

BLITZER: But as you know, there's great concern, especially among the Sunnis, that the Mahdi militia or the Shiites, those militia men have been very, very tough in dealing with a lot of the Sunnis. The Kurds have the Peshmerga, their own militia.

Listen to Adnan Pachachi, a former statesman, a Sunni leader in Iraq. He says, "Anybody who has a militia now has power. The Mahdi army, Badr, the insurgents, these are the ones who wield power. They have weapons. They can move around, and they are determined. It's not a question of political personalities, but of arms and weapons."

What do you say in response to what Mr. Pachachi says?

AL-RUBAIE: Well, I haven't heard the statement from Mr. Pachachi, but I can tell you I agree with the notion that you cannot have a modern, new Iraq based on constitution with a militia running in the streets. That I agreed with.

But I do also -- would like to remember -- remind people that this is -- we're talking about the gradual process of transformation from absolute dictatorship to a full-blown democratic country in Iraq. So we need a transitional period. And I think we have a law, and everybody signed onto that law. And we are on course, I believe.

BLITZER: How much longer before there's a new Iraqi government?

AL-RUBAIE: I think it will take a couple of months. Although I would like it to be formed as soon as possible, like a week or two. But realistically speaking, it will take much longer than this, especially with the setback of this blowing up of the Golden Mosque. It gave us, admittedly, a setback of a couple of months.

We -- I believe we are all working towards this new government, which will be an inclusive government, which will -- all the representation from all sects of and walks of life in Iraq. There's going to be, for the first time, a strong, meaningful Sunni representation in this new government. It's going to be true representation from the Shia and from the Kurds and the Sunnis.

BLITZER: Mowaffak al-Rubaie, thanks very much for joining us.

AL-RUBAIE: Thank you very much, Wolf, for having me.

(END VIDEOTAPE)

BLITZER: And coming up on "Late Edition," the Palestinian militant group Hamas in negotiations to form a new government. But Israel insists it will have nothing to do with a group that refuses to recognize Israel's right to exist. Former U.S. President Jimmy Carter says there's still a chance to craft a peace agreement, but the United States, he says, must play a crucial role right now. We'll have that exclusive conversation with Jimmy Carter.

And we'll bring you the best of the other Sunday morning talk shows here in the United States in case you missed it. This is "Late Edition," the last word in Sunday talk.

(COMMERCIAL BREAK)

BLITZER: There's still time for you to weigh in on our web question of the week, where in the U.S. is it most urgent to step up security? Airports, mass transit, borders, or ports? Cast your vote at cnn.com/lateedition. The results later this hour.

Straight ahead, my exclusive interview with former President Jimmy Carter. What's his strategy for peace in the Middle East? You're watching "Late Edition," the last word in Sunday talk.

(COMMERCIAL BREAK)

BLITZER: The militant Islamist group Hamas won in the Palestinian elections several weeks ago and is currently in negotiations to form a new government.

But the Israeli government says it will have nothing to do with what the Israeli government sees is a terror group dedicated to Israel's destruction.

Israel says it will freeze hundreds of millions of dollars in taxes collected on behalf of the Palestinian Authority.

In addition, the United States and other nations say millions more in aid will be cut off if Hamas takes power without changing its current stance.

Earlier this week, I spoke with former U.S. president Jimmy Carter. He was in Plains, Georgia.

In an article he wrote in the Washington Post, he said the United States and Israel should not punish the Palestinian people for electing Hamas and must find a way to keep money flowing. I asked him how this could be accomplished.

(BEGIN VIDEOTAPE) CARTER: The first thing I'd like to say is that the money that the Israelis are withholding is actually Palestinian money. It doesn't belong to the Israelis. It belongs to the Palestinians.

And this money was destined to be used by the government, whoever is in control of it, for teacher's salaries, for health care, for welfare workers and so forth -- and also to pay policemen.

And, to withhold the Palestinians' money, I think, is going to be a very damaging thing as far as the entire population of Palestine is concerned.

BLITZER: These aren't taxes. These are...

(CROSSTALK)

BLITZER: Excuse me for interrupting. Just to explain to our viewers, these are taxes that the Israelis have collected on the Palestinians which, since the Oslo accords, have gone back to the Palestinian authority?

CARTER: Well, the Israelis have withheld it briefly on occasion, just to punish the Palestinians for something they didn't like. But these are customs funds and tax monies that are collected by the Israelis. But they legally belong to the Palestinians and, to withhold it, is just withholding Palestinian money.

And, as I said, this money would be used, of necessity, to pay the people who are employed by the government no matter who is there. President Abbas explained this to me very thoroughly two days after the election when he realized that Hamas would be taking over some range (ph) of the government.

Secondly, the United States could very well make it clear, along with Israel and others, that, although we are not going to channel U.S. money through the Hamas government, we will channel -- I would hope -- the same amount of money for humanitarian purposes through the United Nations agencies.

Over half the people living in Gaza, for instance, are refugees. So the refugee fund, UNICEF, education funds and others can be given to the Palestinian people.

My concern is that, in order to try, on behalf of the United States and Israel, to punish Hamas, we are actually going to be punishing the Palestinian people who are already living in deprivation and it's going to turn the Palestinian people even more against the west and against Israel and against us and make Hamas seem to be their only friend.

So this will strengthen Hamas and weaken the Palestinian people. I think it's a counterproductive ploy to try to punish Hamas.

BLITZER: Here is the U.S. law of the land, which we looked up, in terms of direct and even indirect funding of a group the U.S. regards as a terrorist organization. The law currently states this -- and I'll read it to you, Mr. President: "It is unlawful for a person in the United States or subject to the jurisdiction of the United States to knowingly provide, quote, 'material support or resources' to a designated foreign terrorist organization," an FTO

And Hamas is listed as an FTO, a foreign terrorist organization. So how do you work around the law in the United States right now, which is that the U.S. taxpayer dollars cannot go to Hamas?

CARTER: Well, that's what I think I just said, that we don't have to give it to the Hamas government or even the Palestinian Authority. What we have to do, if we want to, is to give it to the United Nations with it designated for health, education, the relief of refugees and other matters of that kind.

So we can bypass the Hamas government completely if the United States decides to give humanitarian aid.

(CROSSTALK)

BLITZER: So let me be precise in this. What you're recommending is that U.S. taxpayer money go to some United Nations organization or non-governmental organization, and they could then give it directly to Palestinians, but not through the Palestinian authority.

CARTER: Exactly. Yes, exactly. That's what I've been recommending. And I think that's a very feasible thing and a reasonable thing to do. Otherwise, we're going to have -- indirectly or directly, there are about a million people in the West Bank and Gaza who are dependent on salaries from the government.

And these include school teachers and so forth, as I've described. And I think that the Palestinian Authority, as a government, could then go to other sources, to the rich Arab countries, Egypt and others, to make up for what the United States withholds.

But I don't think we ought to punish the Palestinian people.

BLITZER: Here's what the vice president Dick Cheney said the other day on this issue.

He said "Their" -- referring to Hamas -- "their objective, part of their platform is the destruction of Israel. They are a terrorist organization... They need to give up their objective of the destruction of Israel. They need to forswear violence and, I think, close down their military wing before anybody is going treat them seriously as a legitimate interlocutor."

Basically, the European Union, the United Nations, the so-called quartet -- they have a similar stance right now, as the United States does. How do you get around this, though, in terms of -- this is the new Palestinian authority. There will be a prime minister, Mr. Haniyeh, who is a top member of Hamas.

How does the United States or these European countries deal with the Palestinians now?

CARTER: Well, first of all, you have to remember that Mahmoud Abbas, whom you call Abu Mazen is still the president. He is the one that represents the Palestinian Liberation Organization.

That's the only organization that has ever negotiated peace agreements -- or tentative peace agreements -- with Israelis. And he's there. He's not associated with the Palestinian government under Hamas.

And, if the Israelis want to have direct peace talks, still, of any kind, exploratory or seeking definitive answers, which would be unlikely, then Abbas is available for that purpose without involving Hamas at all.

That's one thing. I don't have any doubt that Hamas had, in the past and maybe even now, still pledges itself to resort to violence. When I was there recently talking to the prime minister of Israel and to his aides, they told me that Hamas was a very disciplined group.

Since August of 2004, Hamas has participated in a cease-fire which, I think, in Arabic is called a hudna and they have not violated this cease-fire at all.

There's been no terrorist activities attributed to Hamas for the last year and a half, 18 months. When I met with one of the Hamas leaders after the election, whom I had also met with 10 years ago -- I hadn't seem him since -- he told me that what the Hamas people want is a peaceful unity government.

Whether he's telling the truth, I have no way of knowing, but my belief is that Hamas now wants to have stable domestically-oriented policies in their government to deal with the problems of the Palestinian people.

And my belief is, if they're treated fairly, they might very well be less likely to resort to violence than if the Palestinian people are mistreated.

BLITZER: I interviewed...

CARTER: By the way...

BLITZER: Go ahead.

CARTER: Let me add that eventually, Wolf, they're going to have to acknowledge Israel's right to exist and to resolve their problems with Israel in a peaceful way. There's no doubt about that. They cannot escape that international mandate which they have to fulfill.

BLITZER: So far, they've indicated they're going to resist that. In fact, I spoke with Mahmoud Al-Zahar, one of the co-founders of Hamas a few weeks ago, right after the election on January 29 and I asked him what kind of Palestinian state he would like to see emerge, whether there should be a secular state. And he was very firm. Listen to his response. (BEGIN VIDEO CLIP)

MAHMOUD AL-ZAHAR, CO-FOUNDER, HAMAS: Do you think the secular system is serving any nation? The secular system allows homosexuality, allows corruption, allows the spread of the loss of natural immunity like in AIDS. We are here living under Islamic control. Nothing will change. Islam is our constitution.

(END VIDEO CLIP)

BLITZER: He's very firm: "Islam is our constitution." He upon wants an Islamic state in Palestine, beginning with the West Bank and Gaza but then, of course, including all of Israel.

Is there any reason that you have to doubt that's what he wants?

CARTER: I don't have any doubt that that's what he wants. I do doubt that that's what the Palestinian people want. It was very interesting in the election, Wolf. There is a small state in the West Bank north of Jerusalem -- I've forgotten the name right now -- where the Hamas had tried to discourage dancing and singing as part of their Islamic restrictions and Hamas actually did very poorly in that area, although it did much better in the rest of the country.

So I know the Palestinian people very well. They are not going to permit the imposition of Sharia law on themselves. And, of course, the dream of some ridiculous Hamas leaders in other countries to take over Israel is, obviously, fallacious and incomprehensible.

So I think what's going to happen now is that the more pragmatic leaders of Hamas, including Haniyeh, who is the new prime minister, I think, will prevail and the Palestinian people will prevail.

There's no doubt that they expressed their will clearly in the election. And I don't have any desire to speak for Hamas, which I think has been horrible in the past in their terrorist activities.

But I think we ought to give a chance to the Palestinian people to establish a kind of government that can be constructive and peaceful if the Palestinian people's rights are honored.

(END VIDEOTAPE)

BLITZER: And coming up, much more of my exclusive interview with former president Jimmy Carter, including his thoughts on the dangers of a nuclear-armed Iran, the current controversy over who will operate ports in the United States and even a report card on the Bush administration.

Up next, though, we'll get a quick check of what's in the news right now, including the latest on today's deadly attacks in Iraq.

Stay with "Late Edition."

(COMMERCIAL BREAK)

(NEWS BREAK)

BLITZER: Welcome back to "Late Edition."

I'm Wolf Blitzer, reporting today from Miami.

More now of my conversation with former president Jimmy Carter from his hometown of Plains, Georgia.

(BEGIN VIDEOTAPE)

BLITZER: Mr. President, do you believe that Iran is secretly trying to build a nuclear bomb?

CARTER: I don't think they are yet, but I believe that Iran has that in mind, yes. I think that's their intention.

Wolf, can I make one other comment about the Palestinian issue?

BLITZER: Please.

CARTER: Well, I've been involved with the Palestinians and with Israel for 30 years and I've seen dramatic and unanticipated changes take place in that region.

When I became president, every Arab nation, led by Egypt, was determined to destroy Israel completely and to do this with the strongest military or violence that they could possibly muster.

When I took Begin and Sadat to Camp David, Egypt changed its mind and they have a peace treaty that's now been effective for more than 27 years, not a word of which has been violated.

Later, when the PLO was the preeminent spokesperson, spokes- organization for the Palestinians, it was determined and publicly committed to destroy Israel and to resort to violence.

When Arafat was given a chance to negotiate with Rabin and with Peres under the auspices of the Norwegians, as you know, a peace agreement was worked out -- of course, the Oslo agreement. So the PLO changed and now Mahmoud Abbas, who's admired by the West, is the head of the PLO.

So it's not an impossibility that the fair treatment of the Palestinians, their prospect of peace and justice along with Israel's prospect for peace I think can lead to improvements in the situation and perhaps to another peace agreement. That's my hope.

But I think it's a mistake to give up and to turn the people of Palestine against the West, against Israel and make violence much more prevalent.

So in the past, we've had good history; maybe in the future.

BLITZER: So your basic point is that you're still leaving out the hope that Hamas will change, will accept the conditions, renounce terrorism, accept Israel's right to exist? Is that right? CARTER: That's my hope.

I can't say it's my expectation yet, but it's certainly a possibility. I've seen it happen in the past.

BLITZER: All right.

Let's get to Iran, another hot issue right now. What should the U.S. and its allies be doing right now to try to stop Iran from building a bomb?

CARTER: Well, obviously, Iran doesn't have a bomb yet and they have not yet started processing nuclear-spent fuel to any substantial degree, although that's what their intentions are, in my opinion.

And I don't think there's much doubt that eventually Iran would like to have nuclear weapons, which would be a devastating threat to peace in the Middle East and perhaps in a much broader area.

So I think the United States working with the Europeans and working with Russia, of course, ought to make sure we do everything we can with a carrot and a stick.

I would say that the stick ought to be the threat of definitive economic boycotts and pressure on Iran, even though we have to lose the source of Iranian oil for the world's markets. And second, to encourage Russia to induce the Iranians -- and there's some talk still going on about that -- to let Russia be the one to reprocess spent nuclear fuel.

That would be my own advice, although I have to say quickly that I don't have any secret briefings or anything about the latest developments.

BLITZER: We don't have a lot of time, but I want to go through a couple of issues with you before I let you go, Mr. President.

The Guantanamo Bay prison -- the U.N. is now suggesting, a report at the U.N., the U.S. should shut it down as quickly as possible.

Do you agree?

CARTER: I've agreed with that since we first found out that torture and oppression was being perpetrated against the prisoners at Guantanamo Bay.

These are people that have been arrested, taken on the battlefield, I understand most of them in Afghanistan. They've never been given a right to hear the charges against them. They've never had legal counsel. They've not been permitted to meet with their families. They've been held incommunicado and all the evidence is that many of them have been psychologically and physically tortured.

So the best thing that the United States could do for our own reputation and for justice in the world and for the honoring of human rights is to shut down Guantanamo Bay prison, as was recommended by the United Nations.

BLITZER: Are you concerned -- one of our top stories today -- about this Dubai-based company taking control of security at six major ports here in the United States?

CARTER: Well, I've been to Dubai and I've seen the remarkable port facilities they have there, perhaps the best in the world. I'm not knocking the ones in the United States, of course.

My presumption is and my belief is that the president and his secretary of state, the Defense Department and others have adequately cleared the Dubai government -- organization to manage their ports.

I don't think there's any particular threat to our security.

However, obviously, the Homeland Security would have to be involved directly with and in partnership with the Dubai people as they cleared folks to work in the ports, particularly in sensitive areas.

So the overall threat to the United States and security, I don't think it exists. I'm sure the president's done a good job with his subordinates to make sure this is not a threat.

BLITZER: How do you think the vice president -- the White House did last week with the Cheney hunting accident?

(LAUGHTER)

CARTER: I think, obviously now, everybody in the White House, maybe not in the vice president's office, agrees that they would have been much better had the information about the hunting accident been revealed immediately, because that's the main concern I think.

Hunting accidents happen all over the world. I regret very much that this one did happen.

But to conceal it for almost a full day, obviously, and then at first to blame Mr. Whittington for the accident I think were two mistakes that were made.

And I'm sure almost everyone agrees that it could have been done better. I think it's time to move on to other things.

BLITZER: I think you're probably right.

One final reflective question on this Presidents Day.

You've written a lot of books since you've left office. You've studied your own presidency, you've studied other presidencies, you've looked at a lot of important issues.

I wonder if you want to give us a preliminary assessment of this current president on this Presidents Day. How will he be rated by historians?

CARTER: Well, I think it's too early to say how Mr. Bush, President Bush will be rated by historians.

You know, he's still got three years to serve and a lot of good things could happen in those three years. We could have complete success in Iraq. We could have major moves toward environmental quality. We could have good harmony between the Democrats and Republicans in the Congress. We could heal the blue and red state divide in the United States. We could reveal everything that goes on in the government that people need to know.

So a lot of things can happen in the future that could very well change the rating of this president or me in historical times. So I'm willing to give the president every chance to build up a legacy that will make all Americans proud now and for 100 years in the future.

Let's check some of the highlights from the other Sunday morning talk shows here in the United States.

On NBC's "Meet the Press," Republican Senator John Warner, the chairman of the Armed Services Committee, announced that a deal had been reached with Dubai Port World to allow a 45-day investigation of their purchase of U.S. port facilities, a deal that the company has now confirmed. Republican Congressman Peter King, the chairman of the House Homeland Security Committee, remains skeptical.

Listen to this.

(BEGIN VIDEO CLIP)

SEN. JOHN WARNER (R), VIRGINIA: Last night, I was contacted by the chief operating officer of this company and he asked to see me, so I went over and I spent about two hours with him and his lawyers and I talked again this morning. And this is a copy of the agreement which is now being delivered to the administration and to members of Congress and it really spells out unequivocally the willingness of this company to give every means of support to help work this thing out.

REP. PETER KING (R), NEW YORK: I would have to be shown that there is nobody in the government today in the UAE which had ties to the Taliban or to Al Qaida, no one within this company has any ties to Al Qaida or to the Taliban. Because, remember, this was only four and a half, five years ago that they were very close to bin Laden, they were supporting the Taliban, and unless there's been a complete transformation, I have real concerns.

(END VIDEO CLIP)

BLITZER: On "Fox News Sunday," homeland security adviser to the president, Frances Townsend, and Democratic Senator Joe Biden disagreed on how the Dubai Port World sale is being handled.

(BEGIN VIDEO CLIP)

FRANCES TOWNSEND, HOMELAND SECURITY ADVISER: We believe that anything that permits there to be additional time so that more people can learn the facts as we learned them is to the better. Because once people understand that security is never going to be outsourced, it will continue to be handled by the men and women of the Coast Guard and Customs and Border Patrol, and that this is really a commercial deal where the security concerns have been addressed, that's a good thing and people will be more comfortable with it.

And let's be honest about it, it reflects the fact that the 9/11 Commission has given this administration failing grades on port security, failing grades on homeland security, and that's what you're seeing underneath all this.

The president can no longer say, "Trust me. My agency's have taken a look at it. I think it's OK."

(END VIDEO CLIP)

BLITZER: And, on ABC's "This Week," as President Bush plans a trip to India this coming week, the actor and activist Richard Gere warned of the danger of an AIDS epidemic there.

(BEGIN VIDEO CLIP)

RICHARD GERE, ACTOR: Now, we're talking about a population in India that is close to a billion people. If this crisis hits them to the degree it's expected to, we've lost Asia.

We're all in this together. And, as Americans with the almost unlimited funds we have to do good in the world for ourselves and others, to not do this is a waste of the promise of who we are as Americans.

(END VIDEO CLIP)

BLITZER: Highlights from the other Sunday morning talk shows here in the United States. Highlights on "Late Edition," the last word in Sunday talk.

Up next, the results of our web question of the week, "Where is it most urgent to step up U.S. security? At airports, mass transit, borders or ports?" And, in the next hour, CNN correspondents are on the story, the story of a Mardi Gras only six months after Hurricane Katrina. Our reporters talk candidly with a live studio audience about how they covered the devastation and recovery of the Gulf coast and how they coped when the story around them became the story about them.

All that and much more coming up at the top of the hour on "On the Story." Don't miss it. First, though, this.

(BEGIN VIDEOTAPE)

BLITZER (voice over): Frances Townsend: What's her story?

The White House homeland security adviser laid out her internal report on the Bush administration's response to Hurricane Katrina this week.

Calling for an end to red tape, Townsend's report proposes 11 steps to improve federal response to disasters and urges that they be put in place by June 1, the start of hurricane season.

A graduate of American University in Washington D.C., Townsend came to the White House from the U.S. Coast Guard, where she served as the assistant commandant for intelligence.

Townsend, whose Democratic background has branded her an outsider of sorts in the Bush administration, is often the public face of many presidential initiatives, including the war on terror.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

BLITZER: Our "Late Edition" Web question asked, "Where in the U.S. is it most urgent to step up security? Airports, mass transit, borders or ports?"

Here's how you voted. five percent of you said airports; eight percent said mass transit; 39 percent said borders; 48 percent said port. Remember this, is not, repeat not, a scientific poll.

Time for your e-mail. Carol from Phoenix, Arizona, writes this: "I am very angry over the fact that the U.S. would even consider selling our ports of entry to a foreign government, not to mention an Arab country with ties to terrorists. This would be a breach of our national security."

Mike from Fruitland Park, Florida, writes: "Selling six American ports to foreign governments should have been the "straw that broke the camel's back for the American people. But this issue somehow gets swept under the rug."

Let's take a quick look at what's on the cover of this year's major news magazines here in the United States. Newsweek features "The New India." Time magazine looks at "Iraq at the Breaking Point" and U.S. News and World Report has a special edition on women's health, "The Female Factor."

And that's your "Late Edition" for this Sunday. Please be sure to join us again next Sunday and every Sunday at 11:00 a.m. Eastern for the last word in Sunday talk.

I'm in "The Situation Room" Monday through Friday back in Washington, 4:00 to 6:00 p.m. Eastern and another hour at 7:00 p.m. Eastern. Until tomorrow, thanks very much for joining us. I'm Wolf Blitzer in Miami.

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